Activity across U.S. companies eased a touch in October, though it remained close to a recent high as firm demand pushed up orders, hiring and prices. S&P Global reported on Friday that its flash composite reading slipped to 57.6, a level that still signals expansion.
Outside the pandemic reopening, businesses are in their strongest stretch since 2015, said S&P Global Market Intelligence's Chris Williamson. Strength this year reflects sturdy consumer spending, investment tied to artificial intelligence and defense outlays.
Companies marked up what they charge at the quickest pace in more than four years, a move tied to rising costs for energy, transportation and raw materials. "Cost pressures remain a key concern, notably as the renewed surge in oil prices reverberates through to impact a wide variety of goods and services," said S&P Global Market Intelligence chief business economist Chris Williamson.
S&P Global reported that delivery times worsened to their worst levels since 2022, citing shortages of materials and labor, strained suppliers, and holdups in shipping. Firms kept adding staff to meet demand, with the composite employment gauge posting the second-highest level in four years and factory headcount expanding at the fastest rate since 2012.
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Orders - a proxy for demand - picked up at the strongest rate in 4 1/2 years in October. The group's overall manufacturing index edged up to 56, the best since May 2022, while activity among service providers eased.
Looking forward, spending on AI and related technologies is anticipated to continue underpinning demand as well as the wider economy in the coming year. According to Bloomberg's latest survey, projections from economists for private investment growth were increased for the third quarter as well as for all of 2027.
In plain English: growth remains upbeat even as cost pressures reemerge. That mix can keep earnings supported while complicating the disinflation story. Watch pricing power in sectors tied to energy and logistics, and the durability of AI-related capital spending, as both are steering the outlook embedded in these surveys.
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